"Super" Mining Tax

[Gozu]

"How Rio Tinto played The Australian for fools"

Today, The Australian’s above the fold, front page story screams the headline “Rio shelves billions in projects”

Andrew Burrell and our old mate Dennis Shanahan then spend 1000 words banging on about how Rudd’s proposed resource rent tax is already killing off projects, with Rio Tinto leading the way.Their starting spiel sets the tone:

"Mining giant Rio Tinto has shelved plans to spend $11 billion expanding its massive iron ore operations in Western Australia because of the wave of uncertainty sparked by the Rudd government’s proposed tax on super profits."

The problem, of course, is that it’s complete and utter bullshit.

Aha! It becomes clearer – the smell of lobbying starts permeating the air.

Business Spectator and Reuters were across this nonsense early. At the first whiff of The Australian headline, they did the proper hard yards that the lazy hacks at The Oz should have done.

“No decision has been made to shelve any projects in Australia”.

You seriously couldn’t make this shit up if you tried.

http://blogs.crikey.com.au/pollytics/20 ... for-fools/

[Gozu]

"Shrieking hysteria won't stop the mining tax":

Back then, the campaign started off in the same way as the campaign against the resource rent tax — with elements of today’s threats to leave the country (taking the resources with them, no doubt), hyperbole accusing the Treasurer of being a communist, hysteria about alleged nationalisation, the end of the world as we know it and a permanent blow to the Australian economy. In other words, all the same claims that got made about stopping children working in mines, the gold tax, the petroleum resource rent tax, Wik, land rights, the emissions trading scheme and too many other things to list.

They may be remembering again, perhaps saving us from claims that the resource rent tax will be imposed on all the suburban backyards that haven’t yet been taken over by indigenous land rights claims.

Over-the-top hysteria also provides your opponents with the opportunity to engage in some fairly effective background briefing, point out obvious errors, round up some third-party endorsement and undermine your credibility. For all the criticism of Rudd government communications, it is fairly obvious that they have got their act together on the briefings on this, as the media tide has already started to turn. Meanwhile, Clive Palmer’s outrageous claims have been shown to be outrageous, the ASX has been gung-ho on disclosure rules and several of the more heavyweight commentators have started to write opinion pieces that balance the hysterical claims.

My bet is that we will have a resource rent tax — probably with some amendments — because the reality is that most of the companies really have nowhere else to go in the long term. The public will be fairly easy to convince that this is our national resource, and we ought to get a slice of it. And do we really think Twiggy Forrest is going to up sticks and head off to Venezuela, Africa, Columbia, Peru or somewhere else?

Somewhat ironically, the mining campaign comes at the same time as the Liberals have launched a retro campaign that, except for a refugee boat, is a complete re-run (arrows thrusting towards Australia and all) of the yellow/red peril ads the DLP used to run in the 1950s and 1960s.

http://www.crikey.com.au/2010/05/13/com ... ining-tax/

[Psyber]

I've never quite understood why Labor gives income tax cuts at all, even if do take back some they promise, like the Keating L.A.W. ones...
Perhaps it has something to do with the high incomes of some of their own office holders, or their spouses?

I don't like the idea of selective taxation, it is arguably unfair and subjective in nature - a government could elect not to tax an industry its Ministers have shares in, but tax others in this way.
It may be more rational to raise the initial taxable threshold somewhat to help the low income earners and let the progressive scales progress further at the astronomical personal income levels for everybody.
Right now, I'd have no objection to paying say 45 cents in the dollar above $100K per annum, 50 cents at $150K, and 55 cents above $200K.
And I think allowing it to progress to 90 cents in the dollar for anything over a million per annum personal income would be fair enough.
More company income, not used for development and essential reserves, may then find its way to small shareholders and superannuation funds.

The only thing is the scales do have to be adjusted for inflation regularly..
I do remember resenting paying 57 cents in the dollar in the mid to late 1970s for what wasn't then a huge income, because the scales had been allowed to creep for so long.

I assume that situation, and the growing general taxpayer resentment, triggered the pattern of tax reductions being offered before elections to buy votes ever since...

[purch]

My bet is that we will have a resource rent tax — probably with some amendments — because the reality is that most of the companies really have nowhere else to go in the long term. The public will be fairly easy to convince that this is our national resource, and we ought to get a slice of it. And do we really think Twiggy Forrest is going to up sticks and head off to Venezuela, Africa, Columbia, Peru or somewhere else?

Yes. They're already "upping sticks".

Is this bloke kidding? How about Canada, Chile, Brazil, Mongolia, Indonesia, eastern Europe, Zambia...just for a start. Many companies currently operating in these countries already make better profits compared to what they could ever achieve in Australia....and that's WITHOUT an additional tax. I do know where most of the world's large natural mineral resources are...and Australia doesn't have even close to a majority on those.

Seriously, it would be nice to see that Gozu had his/her/their own view, but such quotes from crickey.com have hardly raised a comment before now in this thread. I think that says something in itself. Either state your OWN (non-plagiarised) view or give it a break Gozu.

Thanks

[GWW]

"Shrieking hysteria won't stop the mining tax":

Who's that in your avatar Gozu?

[Gozu]

Seriously, it would be nice to see that Gozu had his/her/their own view, but such quotes from crickey.com have hardly raised a comment before now in this thread. I think that says something in itself. Either state your OWN (non-plagiarised) view or give it a break Gozu.

My view was stated in my first post on Page 1. I've been posting that information for people to read so they can come to their own views by not solely having to rely on the mining industry's lies and spin doctors in the mainstream media. I've been thanked a number of times on here in the past both publicly & privately for the links I provide and I'll continue to post articles I come across that pull the mining industry up on their BS.

YOU might not like it, tough.

[Gozu]

Who's that in your avatar Gozu?

It's a pic I came across from old mugshots of English drunks. That pic is of a guy called James Doyle (just brings a smile to my face everytime I see it) who was arrested for being drunk & disorderly in a public place in 1904. Here's the link to them:

Read more: http://www.dailymail.co.uk/news/article ... z0npOCcLYK

[mick]

I've never quite understood why Labor gives income tax cuts at all, even if do take back some they promise, like the Keating L.A.W. ones...
Perhaps it has something to do with the high incomes of some of their own office holders, or their spouses?

I don't like the idea of selective taxation, it is arguably unfair and subjective in nature - a government could elect not to tax an industry its Ministers have shares in, but tax others in this way.
It may be more rational to raise the initial taxable threshold somewhat to help the low income earners and let the progressive scales progress further at the astronomical personal income levels for everybody.
Right now, I'd have no objection to paying say 45 cents in the dollar above $100K per annum, 50 cents at $150K, and 55 cents above $200K.
And I think allowing it to progress to 90 cents in the dollar for anything over a million per annum personal income would be fair enough.
More company income, not used for development and essential reserves, may then find its way to small shareholders and superannuation funds.

The only thing is the scales do have to be adjusted for inflation regularly..
I do remember resenting paying 57 cents in the dollar in the mid to late 1970s for what wasn't then a huge income, because the scales had been allowed to creep for so long.

I assume that situation, and the growing general taxpayer resentment, triggered the pattern of tax reductions being offered before elections to buy votes ever since...

I have a problem with anyone or any company being taxed above 50%, it beggars the question why bother working hard or take risks? I can remember being well into the top tax bracket in the early 90s for a modest income.

[Psyber]

Who's that in your avatar Gozu?

It's a pic I came across from old mugshots of English drunks. That pic is of a guy called James Doyle (just brings a smile to my face everytime I see it) who was arrested for being drunk & disorderly in a public place in 1904. Here's the link to them:
Read more: http://www.dailymail.co.uk/news/article ... z0npOCcLYK

Interesting, I'd assumed it was of some early ALP leader..

[fish]

Who's that in your avatar Gozu?

It's a pic I came across from old mugshots of English drunks. That pic is of a guy called James Doyle (just brings a smile to my face everytime I see it) who was arrested for being drunk & disorderly in a public place in 1904. Here's the link to them:
Read more: http://www.dailymail.co.uk/news/article ... z0npOCcLYK

Interesting, I'd assumed it was of some early ALP leader..

Yeah me too - I thought it was an old lefty like Trotsky, Lenin or Playford!

[Psyber]

Yeah me too - I thought it was an old lefty like Trotsky, Lenin or Playford!

At least two of those were reasonably honest and principled.
Lenin, however, was prepared to live off the ill-gotten gains of his friend Engels' capitalist father...

[Q.]

My bet is that we will have a resource rent tax — probably with some amendments — because the reality is that most of the companies really have nowhere else to go in the long term. The public will be fairly easy to convince that this is our national resource, and we ought to get a slice of it. And do we really think Twiggy Forrest is going to up sticks and head off to Venezuela, Africa, Columbia, Peru or somewhere else?

Yes. They're already "upping sticks".

Is this bloke kidding? How about Canada, Chile, Brazil, Mongolia, Indonesia, eastern Europe, Zambia...just for a start. Many companies currently operating in these countries already make better profits compared to what they could ever achieve in Australia....and that's WITHOUT an additional tax. I do know where most of the world's large natural mineral resources are...and Australia doesn't have even close to a majority on those.

Seriously, it would be nice to see that Gozu had his/her/their own view, but such quotes from crickey.com have hardly raised a comment before now in this thread. I think that says something in itself. Either state your OWN (non-plagiarised) view or give it a break Gozu.

Thanks

Many of the countries have autocratic governance. Companies do well because of the endemic corruption, which allows them free reign of the resources and labour.

And yet these companies have still invested greatly in Australia. They'll continue to do the same despite this tax increase. We are a stable country, with a stable labour force and reliable infrastructure.

It's about time we took more from these corporate giants.

[Gozu]

"Behind the resource rent tax hysteria":

To start with, the sector has been very vocal that it is already very heavily taxed. This is worth subjecting to some scrutiny.

In this space, miners will always quote the 30 per cent company tax rate. They won’t talk so much about the other elements of the company tax system that are equally important, but far less obvious to the casual observer. For example, not many miners will talk about the concessions they enjoy under the company tax. But we all know that concessions like accelerated depreciation mean that the effective tax rate is well below the headline rate.

Once you allow for concessions, the mining sector faces an effective company tax rate of 17 per cent, far shy of the 30 per cent headline rate.

The sector will respond that whatever the existing tax rates, the RSPT will tax them much more heavily.

This is a gross simplification of what is in fact quite a cleverly-designed tax.

Just how cleverly was shown in a table produced in a note by the Treasurer recently (and reproduced below) showing estimates of the effective tax rates applying to projects. What it shows is the very deliberate design of an RSPT to lighten the tax burden on less profitable projects, encouraging investment in the projects that might otherwise have stayed on the drawing board. Higher return projects face a higher effective tax rate under profits taxation compared to royalties. But even here, to face the very high tax rates the sector is complaining about, projects have to be very profitable indeed. Given these profits are made principally from the exclusive right to exploit a non-renewable resource owned by the Australian people, such tax rates are far from unreasonable.

In the 1980s when the Petroleum Resource Rent Tax (PRRT) was mooted then introduced, the backlash was fierce.

These words by Alexander Downer sum up the anti-PRRT cause from those days:

“I think it is an extremely regrettable proposal; I think it is an ill-considered proposal; and, what is worse, I think it is an ideological proposal which is going to do very real damage to oil exploration in Australia. It is going to affect our balance of payments situation and it is going to affect the overall state of our economy. If this is to be one of the pieces of legislation which will form the general epitaph of the government, I think it is highly appropriate. It is an anti-production, anti-development, anti-profit and anti-export tax, and the government deserves to be condemned for the irrationality of that decision."

Of course, we all know what happened next:

In the words of the subsequent government review, tabled in Parliament in 1992, “The extension of the PRRT to the Bass Strait project has rejuvenated activity in the Gippsland Basin. New field development and infill drilling programs on extending development will significantly extend the life of the project and arrest the rate of decline in production.”

A similar pattern occurred before I arrived at the Minerals Council in the 1990s with the long and scarifying debate around native title. Australians were told native title would cause an investment strike, lost projects, lost jobs, exports and national income. As we all remember, the debate had some ugly features throughout.

Of course, we all know what happened next – native title legislation was passed, the sky did not fall in, and the mining industry went on to grow and prosper in the years that followed.

Would miners prefer a lower rate? Of course they would. It is worth making some noise, if there is any chance at all of a 30 per cent or even 20 per cent rate. Miners know that the best way to make noise is to threaten withdrawal from the market. They are not alone in this – it has all too often been the tactic whether the issue is executive salaries, taxation treatment of hedge funds/private equity, gold taxes, financial system reform, etc. The public interest requires that at some point a line, a balance, be drawn.

David Buckingham is a former head of the Minerals Council

http://www.businessspectator.com.au/bs. ... ce=cmailer

[Psyber]

This debate is short term thinking at work again - lets look at it from a different angle...

If we can hold our economy together without selling all our minerals now, there is something to be said for keeping the deposits that will be highly desirable, and highly priced, in the future in the ground for now.
Then we will have them when they are scarce for our own use, and can sell what we can spare at a very high price.
That beats letting them be sold cheaply now, and just taxing their disposal to fund current excessive spending.

However, we should sell off anything that there is not going to be a market for in the long run now - coal for example.
I suspect Uranium comes into the "sell now" group too, because the future nuclear market will be for Thorium and other safer Uranides.
Or, maybe the US will return to the moon, and Helium 3 for fusion will take over as the dominant energy source.

The only problem is we may lose the benefit of our minerals if, say, China decides to invade us and just take them, or the L5 solar energy from satellites programme is ever resurrected...
The problem is working out what the future situation is going to be.
So, it is easier to take the cash now and buy votes with it.

[Q.]

Maybe we'll resurrect Nostradamus to answer some of those hyperbo...uh, hypotheses

[Gozu]

So, it is easier to take the cash now and buy votes with it.

Yep, that strategy right there was a great one during the Howard Government's 11 years in power but the second your mob are in Opposition it's no longer a good strategy

[Psyber]

Maybe we'll resurrect Nostradamus to answer some of those hyperbo...uh, hypotheses

It was meant to be speculative.

However, Helium3 supplies were why the US was showing renewed interest in the moon before Obama won his election.
Under Jimmy Carter the L5 solar satellite cooperative effort between the USA and USSR had reached the stage that men from both countries were already training together, to build trust for working the 2 year shifts - Professor Chester Pearce at Boston University was running this - but Reagan coming to power killed that one.

[purch]

Many of the countries have autocratic governance. Companies do well because of the endemic corruption, which allows them free reign of the resources and labour.

And yet these companies have still invested greatly in Australia. They'll continue to do the same despite this tax increase. We are a stable country, with a stable labour force and reliable infrastructure.

I can guarantee you 100% that this is false

It's about time we took more from these corporate giants.

What...like Banks, telcoms etc? Don't you find that this is industrial/commercial discrimination? As I have stated before it has only been the last few years where Aussie mining companies have been making substantial profits. Historically their returns have been very poor (unlike those companies operating mainly in other countries). If metal prices fall in the next 6-18 months again (as one might expect) then there will be no extra tax anyway. It amazes me that the Australian government can predict metal prices better than companies that mine metals....Some budget lol

[smac]

So, it is easier to take the cash now and buy votes with it.

Yep, that strategy right there was a great one during the Howard Government's 11 years in power but the second your mob are in Opposition it's no longer a good strategy

What about the rest of his post? Must have made sense to not get a comment?

[Psyber]

So, it is easier to take the cash now and buy votes with it.

Yep, that strategy right there was a great one during the Howard Government's 11 years in power but the second your mob are in Opposition it's no longer a good strategy

It's never been a good strategy and I opposed it then too - including inside the party and openly. [Once the last Labor deficit had been cleared up of course.. ]
I'll do the same again after this lot has been recovered from.